DICKSON SAYS BARNEYS DEAL COULD TAKE A YEAR TO CLOSE

Byline: Vicki M. Young

NEW YORK — Dickson Concepts Ltd. on Monday began flashing a caution signal over its definitive agreement with Barneys Inc. just a day after Barneys said it signed the pact to be acquired by the Hong Kong-based concern.
The two retailers struck the agreement last Friday, but Dickson said in a statement Monday it expects the “completion of the acquisition could take up to 12 months.” Dickson further said there was no guarantee that all “conditions” of the agreement would be satisfied.
The purchase agreement between Dickson and Barneys is subject to a number of conditions, including bankruptcy court approval and Isetan’s Co. Ltd.’s agreement to the restructured leases and licenses.
Isetan Co. Ltd., which spent more than $600 million to finance the construction of Barneys three flagship stores, said Monday it still hadn’t seen a copy of the agreement and had not decided whether to oppose a breakup fee for Dickson, should another buyer enter the picture for Barneys.
A bankruptcy hearing to consider Barneys’ request to pay Dickson a $1.5 million commitment fee and a breakup fee of as much as $8 million, originally slated for Thursday, is expected to be postponed until next week to satisfy bankruptcy court notice requirements.
Despite Dickson’s hedging, Lawrence Handelsman of Stroock & Stroock & Lavan, counsel for Barneys’ creditors’ committee, told WWD Monday he did not believe it would take that long to complete the deal.
Under the purchase agreement, Dickson Concepts will acquire 51 percent of Barneys for $247 million in cash and debt, plus 49 percent of the stock in the new company that is to be distributed to creditors, as noted.
Dickson would realize a breakup fee if the Barneys deal falls apart because of a higher bid.
An outsider would need to pay a minimum of $9 million beyond Dickson’s $247 million stock and debt offer. That’s because a new bid needs to match the breakup fee of $8 million plus another $1 million.
Additional bids would need to be raised by $1 million increments, according to Handelsman.
Dickson would get a $5 million breakup fee instead of the $8 million, said Handelsman, should Barneys opt for a “creditor-assisted plan.” Under such a plan, the creditors would contribute funds to Barneys’ reorganization.
In a third approach, Dickson would get just the $1.5 million commitment fee if Barneys funds its own plan in which creditors would exchange debt for equity, but Handelsman said that possibility was not likely.
Handelsman said there is also a provision in the purchase agreement that requires Barneys to consult with Dickson about actions beyond the normal course of business, such as plans to open new stores or to deviate from the business plan.
In a separate development, Dickson also announced Monday that it entered into an exclusive long-term license agreement with Alviero Martini SpA of Milan to sell and distribute merchandise under the Prima Classe label in Southeast Asia, with operations to begin first in Hong Kong and Taiwan.
The goods will include women’s apparel and accessories as well as handbags and luggage.

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